ESMA follow-up report to its peer review on supervision of cross-border activities of investment firms under MiFID II

The European Securities and Markets Authority (ESMA) has published a follow-up report to its 2022 peer review on the supervision of cross-border activities of investment firms. The original peer review identified shortcomings in the authorisation, supervision and enforcement of these activities across six national competent authorities (NCAs). In response, ESMA issued recommendations to strengthen the cross-border supervisory framework through risk-based, proportionate and effective supervision aligned with the scale, nature and complexity of cross-border activities. This follow-up report assesses the progress made by the NCAs in these jurisdictions in implementing the recommendations.

Overall, the follow-up report shows that the peer review has successfully driven improvements within the EU Single Market. Specifically, the report highlights notable progress in three key areas: (i) stronger authorisation controls, where NCAs have enhanced assessments of firms' cross-border plans; (ii) data-driven and risk-based supervision, where NCAs are increasingly using data to monitor cross-border activities, tailoring supervisory action based on identified risks; and (iii) enhanced cooperation and enforcement, where NCAs have undertaken more targeted supervisory actions, reported enforcement cases where relevant and strengthened cooperation.

While the report acknowledges progress, some risks remain and it encourages NCAs with significant outbound cross-border activities to ensure that their supervisory and enforcement approaches match the scale and complexity of these activities and keep pace with evolving risks. ESMA encourages all NCAs, and in particular those where outgoing cross-border activities are significantly growing, to reflect on the report's conclusions.

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